The parent company of British Airways has just released its financial results for the third quarter of 2019 and it turns out that the European airline heavyweight is still outperforming many of its rivals in the region. International Consolidated Airlines Group (IAG), which also owns Aer Lingus and Iberia as well as low-cost carriers LEVEL and Vueling, issued a profit warning in September over a costly pilots strike that is yet unresolved.
Highlights of today’s financial results include:
- Operating profit of €1.42 billion in Q3 – down €105 million on the same period
- Operating profit for the first nine months of 2019 totals €2.52 billion – down 9%
- Passenger unit revenue down 0.5%
- Fuel costs up by 6.1%
On a more positive note, IAG also reported:
- Passenger revenue was up 5.3% to €17 billion
- Load factor went up t0 84.7%
- Passenger numbers up by nearly 5% to 90,448
At this stage in the year, IAG doesn’t break down the results by individual airline so it’s difficult to judge whether a particular airline brand in the group is underperforming or conversely achieving more than its fair share. But taking the group as a whole, a quick comparison with the Air France-KLM Group reveals that IAG is way ahead of its Franco-Dutch competitors.
Passenger numbers for the first nine months, for example, stood at 79,593, while profits for the group came in at just €126 million.
Air France-KLM blamed an uncertain “global economic and geopolitical” environment for its results and said it would be pursuing further cost cutting initiatives to stand a fighting chance in a “highly competitive marketplace”.
Willie Walsh, chief executive of IAG, clearly realises that in spite of the pilots strike at British Airways the results remain good.
“These are good underlying results,” he said this morning. “As we said in September, our performance has been affected by industrial action by pilots’ union BALPA and other disruption including threatened strikes by Heathrow airport employees.”
“In addition, our fuel bill increased by €136 million during the quarter with fuel unit costs up 4.2 per cent at constant currency,” he continued.
As it stands, IAG is now estimating operating profits to be €215 million lower than in 2018.
The BALPA pilots union hasn’t yet commented on today’s results but it’s expected they’ll use it as further evidence that British Airways can afford to meet its demands over pay and conditions. BALPA hasn’t given any public update on the continuing negotiations with British Airways since late September but the union has until early next year to call further strike action if it chooses to.